Peach Cars, an automotive marketplace based in Kenya, has announced the successful closure of its $5 million seed round. The funding round was led by The University of Tokyo Edge Capital Partners (UTEC), a Japan-based firm, and saw participation from notable angel investors including Shintaro Yamada, the founder and CEO of Mercari, Peter Kenevan, Vice President and Head of Japan at PayPal, and Hiroaki Ohta, a general partner at Japan’s Waseda University Ventures.
Founded in 2020 by Kaoru Kaganoi and Zachary Petroni, Peach Cars aims to democratize car ownership in sub-Saharan Africa, starting with Kenya. The company plans to utilize the raised capital to fuel its business growth, expand its talented team, and focus on research and development as it continues to enhance its technological solutions.
The founders of Peach Cars shared their motivation, citing over a decade of collective experience living in sub-Saharan Africa and engaging with friends and industry professionals. Through their interactions, they identified a significant opportunity in Kenya’s used car market. Unlike Japan, where trusted second-hand item marketplaces are readily available, Kenya lacked such platforms. Existing marketplaces suffered from issues like price opacity, information asymmetry, fraudulent activities, insecure payment systems, and poor customer experiences.
Peach Cars aims to address these challenges by providing a transparent and secure platform that offers a seamless experience to buyers and sellers in Kenya’s used car market. With the recent funding injection, the company is well-positioned to drive its mission forward and revolutionize the automotive industry in the region.
“I struggled to get affordable second-hand items, including furniture and electronics, when I moved into Kenya,” said the CEO. “I also struggled to find good condition vehicles as well as there are no established inspection methods and service providers, and you need to know a good mechanic yourself to get these quality checks done at a personal level.”
Before launching Peach Cars, the founders had to carefully consider several factors. One crucial aspect was assessing the market viability and evaluating whether the unit economics were favorable. They recognized the significance of establishing efficient operations, particularly for a commission-based business model. Peach Cars understood that targeting high-value asset classes in Kenya would be essential. Moreover, the founders’ prior experiences in the mobility space, specifically their roles as operators at the ride-sharing app and super app SafeBoda, provided valuable insights.
During the interview, Kaganoi also challenged the prevailing notion that Africans, living in an economy characterized by small-scale transactions, make purchases without much thought regarding the process and outcomes. Contrary to this belief, he highlighted that spending time in African malls reveals a different perspective, with people genuinely caring about their shopping experiences. The primary objective for Peach Cars, as stated by the CEO, is to provide everyone, regardless of whether they are purchasing a $4,000 or $40,000 car, with the same delightful experience.
Kaganoi further emphasized that Africa’s youthful population and expanding middle class have not yet established a strong rapport with automotive mechanics. These demographics seek convenient, customer-centric, and trustworthy services that cater to their needs. As a result, Peach Cars was established with the aim of bringing transparency and enhancing the car ownership and maintenance process in Kenya.
The company proudly introduced a smart engine check device that incorporates Peach’s proprietary software, enabling the automation of their car inspection procedures. With a meticulous 225-point inspection system, which adheres to Japanese auto industry standards given that 80% of cars in Kenya are of Japanese origin, Peach Cars provides a comprehensive and accurate report on all vehicle systems.
Peach Cars operates in a similar space as Autochek and Moove, two prominent African mobility startups. These companies focus on aspects of car ownership and automotive repairs, with Autochek specializing in asset financing and management, and Moove catering to both B2C and B2B2C models. In contrast, Peach distinguishes itself as a pure C2C marketplace akin to Jiji.
According to Petroni, Peach has a competitive advantage over Jiji due to its commitment to educating users about the car ownership lifecycle. Furthermore, Peach offers faster discovery processes, improved transaction and payment management, and places significant emphasis on car maintenance and servicing. These factors contribute to Peach’s unique value proposition in the market.
“Customers would like to find truthful and transparent ways to maintain their vehicles; hence Peach is accommodating its needs by providing the car care service,” the COO said. “Peach can leverage its inspection methods and information for the better diagnosis of the vehicles and the quality assurance of the fixes made on vehicles.”
Peach generates revenue through service fees and commissions earned from successful transactions between sellers and buyers. Additionally, it offers value-added services such as handling administrative tasks for agreement transactions, inspections, change of ownership processes, secure payments, and vehicle handovers. As a result of its growth, Peach has experienced significant success, with monthly Gross Merchandise Volume (GMV) surpassing $200,000. This remarkable figure represents a tenfold increase compared to its numbers when the platform initially launched two years ago. Looking forward, Peach plans to establish a nearly fully automated inspection center by 2024.
“Peach is pioneering the most customer-centric, trustworthy, and advanced used-car platform in Sub-Saharan Africa by coupling their operational excellence with smart IoT devices and data analysis,” Kiran Mysore, Principal at UTEC, who joined the startup’s board, said on the investment. “UTEC is proud to partner with Peach and foster Japan-Africa collaboration by augmenting Peach with Japanese automotive expertise and network.”
GetFundedAfrica is a cloud-based technology platform that specializes in developing software that helps businesses raise funds, grow, and effectively tell their stories. Whether you want to raise funds ranging from $100k to $50m or you simply want to grow your business, sign up for free at www.getfundedafrica.com